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DISCUS Applauds U.S. Move To Fight 'Discriminatory' Indian Spirits Tariffs At WTO

March 5, 2007 07:00 PM

Washington, D.C. -- The Distilled Spirits Council today applauded a U.S. government decision to take the first step toward launching a World Trade Organization (WTO) dispute settlement case against India’s discriminatory tariffs on imported spirits and wine, which can be as high as 550% on some products.

“The Distilled Spirits Council and its members strongly support the Administration’s decision to pursue a WTO case against India, whose tariffs on imported distilled spirits are clear violations of the WTO’s rules,” said Deborah Lamb, the Council’s Senior Vice President for International Trade.

“India’s exorbitant tariffs have made it nearly impossible for U.S. spirits exporters to break into the Indian market – one of the largest spirits markets in the world, valued at about $14.2 billion at the retail level,” Lamb stated. Imported spirits account for less than one percent of the Indian market. U.S. spirits exports to India in 2006 were valued at only $540,000 (FAS Export Value).

“It is time for India to eliminate its WTO-incompatible practices and dismantle the web of additional duties and charges that unfairly blocks imports of spirits and wine,” she added.

India’s basic import tariff -- 150% on bottled imported spirits -- is also its “bound” rate. In WTO jargon, this means that India cannot exceed that rate without violating its WTO commitments. However, since 2001, India also has applied additional customs duties on imported spirits and wine. Today, the additional customs duties on imported spirits range from 25% to 150%, depending on the per-case price of the imports. These additional duties are assessed on top of the import tariff. To that amount is added a 4% import surcharge in the form of an “extra additional duty,” yielding effective tariff rates ranging from 225% to 550%.

Lamb noted that in 2006, DISCUS urged the Administration to join the European Commission in taking India to the WTO if it failed to bring its tariff regime into compliance with WTO rules. India refused to do, she said.

“We are pleased that the Administration has now requested formal WTO consultations with India and look forward to working with the Office of the U.S. Trade Representative as the dispute settlement process unfolds,” Lamb concluded.